Govt drops 3 blocks from 2nd phase of auctions

Auctioning of coal blocks reached a major milestone today with the signing of agreements for the first batch of 15 blocks but the achievement has not come without problems.

In a last minute change, three coal blocks have been withdrawn from the upcoming second phase of e-auction. Even for the concluded first phase, the government has chosen not to sign agreements for three blocks, leaving the fate of winning bidders — Jindal Power, BS Ispat and Balco–hanging.

Among the coal blocks kept out of second phase of auctioning and listed in Schedule – III of the Coal Ordinance, comprising mines about to start production, Utkal B1& B2 in Orissa are embroiled in court case filed by its prior owner Jindal Steel & Power. Rohne in Jharkhand has been dropped as there are not necessary environment clearances, whereas, Durgapur –II coal block in Chhattisgarh has under construction airport over the land of the mine, about to be commissioned in April, 2015.

Naveen Jindal group’s Jindal Power had won its earlier owned mine back Gare Palma-IV 2&3 in Jharkhand at the lowest bid in the auction Rs 108 per tonne. This is also the richest mine among all with 6 million tonne of annual capacity and the end use is power generation.

The other blocks kept for power sector have received high bids such as Rs 1,110 per tonne for Tokisud in Jharkhand and Rs 940 for Trans Damodar in West Bengal. The auction of Gare Palma-IV/1not only received lowest bid but was concluded in just two hours. The bidding for other blocks ran for 12 to15 hours.

Senior coal ministry officials said that the Nominated Authority for coal auction will “compare the comparables in the auction such as bid price and time duration of auction”. Coal ministry officials said re-examination would get concluded in two to three days.

In the unregulated steel, cement and iron sector, BALCO won Gare Palma-IV/1 in Jharkhand at Rs 1585 per tonne and BS Ispat won Marki Mangli-3 in Maharashtra at Rs 918 per tonne.

The bids were quite low in comparison to price bids such as Rs 3,502 for Bicharpur block.

Through the auction of 18 coal blocks in first phase, the government received total proceeds of 1.35 lakh crore which will go to six mineral rich states. In the upcoming second phase, now there will be 16 coal blocks to go under the auction hammer.

The government is re-allocating cancelled coal blocks by the Supreme Court in phased manner through a transparent e-auction process.